India’s Sensex Ends Two Weeks of Declines on Economic Prospects

Indian stocks rose, sending the benchmark index to its first weekly gain in three, amid a rally in global equities and expectations for faster economic growth.

ICICI Bank Ltd., the biggest private lender, climbed to a two-week high. Reliance Industries Ltd., owner of the world’s largest refining complex, increased the most in seven weeks. Sesa Sterlite Ltd., a copper producer, advanced for a third day.

The S&P BSE Sensex added 0.9 percent to 27,371.84 at the close in Mumbai. The MSCI Asia Pacific index jumped 1.7 percent as global equities extended gains after the Federal Reserve said it’ll be patient with interest-rate increases. India’s economy is projected to grow 5.5 percent in the year ending March 2015, the finance ministry said in a mid-year economic review presented to parliament today. The nation’s gross domestic product grew 4.7 percent last year.

“We are reasonably constructive on the Indian markets,” Sridhar Sivaram, managing director at Morgan Stanley Investment Management, said in an interview with Bloomberg TV India today. Sivaram said he expects 15 percent to 20 percent returns from the markets next year. “All the building blocks for an economic recovery are very much is place.”

India’s consumer price index increased 4.38 percent in November from a year earlier, the least since the gauge was created in early 2012, and industrial production fell the most in three years, official data showed on Dec. 12.

‘Game Changer’

Wholesale prices unexpectedly stagnated last month, a separate report showed Dec. 15. The decline in prices came amid a fall in crude prices, with West Texas Intermediate having dropped more than 40 percent in 2014. India imports about 80 percent of its crude oil.

Governor Raghuram Rajan, who left the central bank’s benchmark repurchase rate at 8 percent for a fifth meeting on Dec. 2, said on the day that “a change in the monetary policy stance is likely early next year” should improvements in the inflation rate and fiscal health continue.

“Oil prices have come off so sharply that it’s a game changer from an Indian context,” Morgan Stanley’s Sivaram said. “There could be volatilities because there is a possibility of an interest rate hike in the U.S. next year.”

Annual Gain

ICICI Bank climbed 3 percent, the most on the Sensex today.

Reliance Industries added 2.3 percent, the sharpest gain since Oct. 30. Sesa increased 2.2 percent.

Larsen & Toubro Ltd., the largest engineering company, advanced 1.9 percent. Coal India Ltd., the world’s biggest producer of the fuel, added 2.3 percent, extending this year’s gains to 30 percent. Tata Power Co., India’s biggest electricity generator outside state control, rose 2.5 percent.

The Sensex, which climbed 0.1 percent this week, has added 29 percent this year, its biggest annual gain since 2009. The gauge is valued at 15.1 times its projected 12-month earnings, while the MSCI Emerging Markets Index trades at 11 times.

Global investors sold a net $253.4 million of local shares on Dec. 17, paring this year’s inflow to $16.6 billion, the most in Asia after Japan, data compiled by Bloomberg show.

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